Fixing India’s Logistics Nightmare - How Multi Modal Parks Will Help

Building 35 Multi-Modal Logistics Parks (MMLP) has been a key part of the Modi government's strategy to reduce logistics costs to less than 10 per cent of GDP.

Currently, logistics account for 14 per cent of GDP - making India far less competitive on the global stage.

Over Rs 50,000 crore was allotted for setting up these MMLPs as part of the first phase of Bharatmala Pariyojana approved in 2017.

These MMLPs will cater to 50 per cent of the nation's freight traffic. Apart from MMLPs some 24,800 kms of new roads were also approved under the Central scheme.

MMLPs can be thought of as a comprehensive logistical solution offering nearly all freight related services in one place. This includes container terminals, cargo terminals (bulk, break-bulk), warehouses, cold storage, and facilities for mechanised material handling.

Apart from the above facilities, MMPLs are also meant to offer customs clearance with bonded storage yards, quarantine zones, testing facilities and warehousing management services. This would help handle freight much more efficiently.

MMLPs have been conceived on 'Hub and Spoke' model, integrating rail, road, inland waterways and port access.

The government expects two lakh jobs to be created around MMLPs, as they are likely to trigger new manufacturing or assembling clusters around them.

Out of 35 MMLPs approved for implementation, five are in the state of Gujarat, followed by four in Maharashtra, three in Punjab, and two each in Andhra Pradesh, Haryana, Madhya Pradesh, Odisha, Rajasthan and Tamil Nadu.

One MMLP each has been approved in the states of Assam, Bihar, Chhattisgarh, Goa, Himachal Pradesh, Karnataka, Kerala, Telangana, West Bengal and the UT of Delhi and Jammu and Kashmir.

National Highway Logistics Management Limited, a 100 per cent subsidiary of NHAI, is the nodal agency for implementing the MMLP projects. The company will further create new SPVs along with public or private companies for each of the individual MMLP projects.

The SPV will have members from private contractors, the concerned state port authority, roadways, railways, electricity, power utilities and other stakeholders. If a state has more than one MMLP, then the SPV can be the same.

For example, the Rs 1,045-crore MMLP at Mappedu in Tiruvallur near Chennai is being executed through a SPV with Chennai Port Trust (ChPT), Tamil Nadu Industrial Development Corporation Limited (TIDCO) and NHAI as equity partners.

The SPV will select a concessionaire through competitive bidding for the development and operation of the MMLP. The SPV will provide land and connectivity but the actual MMLP infrastructure will be developed by the selected concessionaire.

The planned 35 MMLPs will be built through a Design, Build, Finance, Operate and Transfer (DBFOT) framework.

The chosen concessionaire will build, finance and operate the facility for a fixed duration or concession period, and then the asset shall be transferred to the public sector authority.

A Model Concession Agreement (MCA) has been devised for 35 MMLPs. The MCA provides for starting commercial operations within two years of the start of the project.

As of July 2022, pre-feasibility studies are in progress for 21 MMLPs. Detailed Project Report (DPR) preparation is in progress for eight sites. For Jammu, the DPR process is being initialised.

Bids have been invited for MMLPs in Bangalore, Chennai and Nagpur. The MMLP in Chennai and Nagpur will be ready by 2024-end.

The foundation stone of the country's first MMLP at Jogighopa in Assam was laid in October 2020 and is slated to be completed by 2023. The park, spread across 317 acres in Bongaigaon district of lower Assam, has a cargo capacity of 13 million metric tons (MMT) per year.

In addition to the 35 MMLPs already planned, the government has identified another 11 locations for setting up MMLPs. These will be built under the second phase of Bharatmala Pariyojana.

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